Apple Growing Industry
Page 5865
Urgent Motion
Mr AMERY (Mount Druitt—Minister for Agriculture, and Minister for Land and Water Conservation) [3.56 p.m.]: I move:
(1) supports the $73.2 million New South Wales apple growing industry, which employs 5,000 people directly and indirectly in areas such as Orange, Batlow, Camden, Bilpin, New England, Bathurst and Forbes;
(2) applauds the research and advisory work by New South Wales Agriculture to help apple growers increase productivity;
(3) notes with alarm that apple growers are being offered as little as 32 cents a kilogram by the major supermarket chains, while it costs them as much as $1 a kilo to grow;
(4) further notes that the major supermarket chains are charging consumers up to $4 a kilo for apples; and
(5) calls on large supermarket chains to immediately end price discrimination against our apple growers.
This urgent motion is very important to regional and rural New South Wales. The apple industry, as the motion states, is worth around $73.2 million to New South Wales. It is spread across 300 or so farms in the areas referred to in the motion. That number is down from about 450 producers only a short time ago. Together these farms produce about 77,000 tonnes of apples each year. The apples produced by New South Wales growers are recognised as being of the highest standard. This result has been helped along by the work New South Wales Agriculture is doing, including a range of activities such as evaluating new varieties in various districts. It also implements growing systems to ensure that products meet the market. It conducts research and development into new methods of managing pests and diseases, including an early warning service for disease infections.
The department also develops integrated pest management systems which reduce pesticide input and reduce the cost of production. It provides on-farm advice on all aspects of production such as irrigation, soil management, printing and tree pruning. We have a deciduous fruits research and development team at the Orange Agricultural Institute, which includes a pathologist, an entomologist, a plant physiologist and a district adviser. The team is supported by fungal bacteria and insect reference collections, standard disease diagnostic services and experimental tree plantings.
Despite all this work, our apple growers are fighting an uphill battle trying to get a fair price for their produce. Apple growers spend an average of $1 per kilogram introducing their apples. The supermarkets are currently paying them only 32¢ a kilo for their produce. The supermarkets are creating more and more limitations on the standard of apples they accept. At the same time they are demanding lower and lower prices from the producers. Supermarkets are charging anything up to $4 a kilogram for apples on their shelves—a massive mark-up of almost 1,200 per cent.
Meanwhile, growers are struggling to make a dollar and many are actually losing money in their production. Some are being forced out of the industry as a result. The problem is further exacerbated by the fact that the supermarkets account for about 70 per cent of total fresh food sales. There is therefore little choice for the growers in terms of other outlets for their produce. The major supermarket chains specify quality needs to growers in terms of colour, size, variety, blemish, cold temperature at delivery and other parameters. Different supermarket chains have different demands. I have heard that some supermarkets are turning down consignments of apples based on very minor issues. I refer honourable members to an article in the Land today.
An article in the Land today referred to a grower in Orange who had a consignment of apples rejected by a supermarket because the apples were a little off colour; it had nothing to do with the quality that is generally demanded of fresh food. The apple grower did not know where to sell his apples, because supermarkets have different quality guidelines. Supermarkets are pushing down prices, forcing growers out of production and generally treating the industry with contempt. Some growers have changed the variety of their apples in response to market demands, but many simply do not have the capital to replant with new varieties. It is a catch-22 situation. Apple prices in supermarkets are high so consumer demands go down, and supermarkets then claim that there is a surplus.
If a fairer approach were taken towards consumers and growers, supply and demand might be a little more balanced. Instead, major retailers are dictating the market, and distorting it in the process. This is not an isolated incident. Supermarkets make a fortune out of fresh produce. Some supermarkets have a 1,200 per cent mark-up and growers and consumers are the losers. Debate has taken place in this House about the dairy, milk and meat industries, which are classic examples of a David and Goliath situation. But in this case Goliath, the supermarkets, are succeeding in their buying power stranglehold. Primary producers are suffering as a result. I conclude by calling on major supermarkets to immediately end this price discrimination, particularly against apple growers in New South Wales.
I again refer to the article in the Land. It is important that producers work together so that they may have some power in the marketplace. I am sure the House will support the motion and send a message to our supermarket chains that apple growers and many other primary producers deserve a fair go from them. Without those suppliers the supermarkets could easily buy their produce interstate or overseas—a situation that should be carefully monitored. This motion deserves the support of the House.
Mr SLACK-SMITH (Barwon) [4.02 p.m.]: The Opposition supports the motion. I am somewhat disappointed that the Minister has only become aware of this problem by reading the Land. He obviously does not know his portfolio. If he did, he would realise that the motion should be far broader and should include other industries. However, I am pleased that he has read the Land and is now au fait with what is going on in agriculture in New South Wales. I was disappointed also that the Minister made only a passing reference to other aspects of agriculture, yet this problem is rampant in terms of virtually all produce sold in supermarket chains throughout New South Wales.
As the Minister rightly said, 77 per cent of all fresh fruit and vegetables is sold in major supermarkets. I have known for some time that buyers for major supermarkets go down the rows of fresh fruit and vegetables at the markets, choose certain pallets and tell the producers that they will return later to pick them up. The producers put the pallets aside, but often the buyers return later to say that they have found a better deal down the road. In one case of which I am aware a grower had to take about six tonnes of ripe rockmelons home from the markets because the supermarket played him for a sucker. That type of thing happens often, typically in the meat industry.
Over the past five or six years some of the major supermarket chains have asked smaller operators and feedlots to become accredited, which is quite expensive. The supermarkets have told the operators that they would purchase livestock at a certain price. However, after the operators have forked out money for accreditation the supermarkets have said that the livestock did not meet their changed criteria and should be taken elsewhere. Producers are totally committed to one niche market, hopefully at a premium price, but are often rejected by supermarket chains. They receive no compensation and many feedlots have had to close down. There is no competition because 77 percent of all fruit and vegetables in New South Wales is sold to supermarkets.
Previously many people shopped close to their homes at small corner stores which were run as family businesses. However, they now choose to go to larger supermarkets, where they can buy everything in one place. That is the dilemma facing many smaller operators today. Many have gone to the wall because they cannot compete with the big operators. It is a terrible shame. Producers are being fleeced so badly by supermarket chains that they are finding it very difficult to adapt to new markets, new varieties of produce and new farming techniques that come onto the market every year because they do not have the necessary income and capital. As a result New South Wales is being left behind in the export market. It is a serious problem.
Supermarkets should consider the long-term viability of those producers, who in most cases are very efficient by world standards. However, efficiency is not enough if one cannot receive a proper return for a quality article. Other countries have been able to support industries in such a way that producers are able to receive a good return for their produce and can therefore be more competitive by undertaking research and development. They are better able to beat New South Wales to many of the markets that are opening up throughout the world.
Today we are exporting oranges to California. I commend the Department of Agriculture and the producers for that because it is a tremendous boost to our exports. However, many producers in other industries are unable to do that. The apple industry is a very small part of the fresh fruit and vegetable industry throughout New South Wales, but $73.2 million per year is not a bad effort, with 5,000 people taking home a pay cheque. It provides employment opportunities, either directly or indirectly. When one multiplies the $73 million by four, a substantial amount of money is being generated through this industry alone.
This problem occurs in Orange, Camden, Batlow, Bilpin, New England, Bathurst and Forbes. It spreads across the State to towns that desperately need those industries to help their economies. Major supermarket chains pay 32¢ a kilogram but sell the produce for $4.00 a kilogram. That is pretty rich. I understand that they have to compensate for losses, spoils and damage, but not to that extent, and if they do, they should examine their packing and freight structure because that type of mark-up is unacceptable. Old, bruised, spoiled and otherwise damaged produce will always have to been thrown away. However, I agree with the Minister and I support the Government in this matter. The Opposition believes that producers are getting the rough end of the deal, and it is giving both sides of the House the pip.
Mr MARTIN (Bathurst) [4.10 p.m.]: I support the urgent motion moved by the Minister for Agriculture, and Minister for Land and Water Conservation, and I welcome contributions from Coalition members. However, the honourable member for Barwon implied in his speech that the New South Wales Department of Agriculture was not supporting the industry adequately. The honourable member said that other areas receive research and development assistance and that perhaps the department could do more for the agriculture industry. I suggest that the New South Wales Department of Agriculture assists all agricultural industries, particularly the apple industry. It is time to focus on the apple industry and to consider all developments in that area. The same problems will occur in the dairy industry if the deregulation proposal proceeds. We have almost reached that point, and the retail chains will reap the benefits at the expense of the farmers.
It has been a good season, particularly in my area, and farmers are expected to make a good return. However, apples have already retailed at $4 a kilogram, with the retail chains claiming that the drop in price is due to a surplus. Those chains have caused the drop in demand; there is no surplus. No more apples are available this year than last year, despite the fact that it was a great season for quality produce in the Central West. The retail chains have driven down demand by selling at the ridiculous price of $4 a kilogram, a price that most working producers cannot handle. That is the sort of underhanded tactic that the retailers use. Some 77 per cent of the industry is controlled by the major retail chains. The Federal Government recently tried to introduce legislation to break that domination, as has occurred in the United States of America and Japan. However, that is considered to be too hard to achieve in Australia, so we must cope with the present situation.
I talked today to Borry Gartrell, an apple grower from my area and a well-known figure in the Central West. He is a former councillor on Orange City Council and well known to the honourable member for Orange; it is unfortunate that the honourable member cannot be present for this debate. However, I take more than a passing interest in the Orange electorate and I receive many inquiries from its residents. Borry told me that this year he will produce 300 tonnes of apples and that he estimates a loss of about $30,000. He is so frustrated by the attitude of the retail chains that he has resorted to loading up his truck and virtually selling door-to-door to small retailers. He supplies the Tuckerbin at Springwood and other small retail outlets around Sydney. That is difficult and time-consuming work, but such is his frustration.
Growers recently organised a major meeting in Orange in an effort to bring the matter to a head. At that meeting, the New South Wales Chairman of the Apple and Pear Growers Association gave the example of Pink Lady apples, a premium apple variety, which were sold recently for $30 a case. The buyers representing the major chains—Woolworths, Coles, Franklins and so on—put growers on notice some weeks ago that they would receive about $26 a case the next time they offered those apples for sale. The major retailers have already worked out their marketing strategy, which has nothing to do with the workings of the free market. If we analyse the process closely from the farm gate to the markets, we may see that some buyers and agents have something to answer for as there is anecdotal evidence to the effect that some are guilty of collusion at the expense of the growers.
It is important that the Parliament sends the message that something must be done to redress this situation and ensure that those at the bottom of the scale receive just recompense. The Opposition acknowledges that our rural industries are extremely efficient, and the apple industry is no exception. However, it is pointless for growers to improve their efficiency if they are then screwed by the big operators. That is basically what is happening at the moment, and we need to help growers wherever we can. I am delighted to support the Minister's motion. [Time expired.]
Mr PICCOLI (Murrumbidgee) [4.15 p.m.]: I agree with the terms of the Government's motion. What is happening to apple producers as a result of supermarket dominance—there is only a small number of retail players—is terrible. I draw the attention of the House to a similar example on my family's property. We grow 250 acres of onions a year, and at harvest time last summer we were forced to plough in about 30 acres of purple and white onions because the large supermarkets were importing them from the United States of America, presumably at a fixed price. We could not even harvest our onions because the costs were too great. The large retailers must have signed contracts with American suppliers, and that is absolutely disgusting. I do not know whether the Federal or the State governments can do something about it, but Australian producers are being left in an extremely vulnerable position. We would have been able to supply the produce at a much cheaper price than the American suppliers, yet we could not give our onions away. Some producers who had already harvested their onions had to dump bins of perfectly good produce.
Pursuant to sessional orders debate interrupted.
Mr SPEAKER: Order! It being after 4.15 p.m., the question is: That private members' statements be noted.
Mr DEBUS: I seek leave to make a personal explanation.
Leave granted.